Stop Profit Loss at the Bar

By Janine Sullivan, Contributing Editor
| February 14, 2012

Bars and pubs around the world are made popular by their unique ambiance, personnel, and community rapport. Bringing technology into this mix could risk the personal nature of the bar experience, endangering customer relationships. New technology in the bar might also intimidate employees, who could feel that “big brother” is watching and evaluating every move. While the risk for these outcomes exists, the experience of bar managers seems to be the opposite, especially if they view it as an opportunity to improve customer service and encourage a team spirit among employees to improve
revenue opportunities.

Understanding what is happening at the beer tap can be a challenging undertaking. Companies such as Bevchek Inc. (www.bevchek.com) offer beer inventory control and monitoring systems that compare data from the taps with what is reported as sold in the POS system. Before entering a pilot trial with TapDynamics’ TapAdvisor (www.tapdynamics.com) draft beer monitoring service, Eric Peterson, food & beverage director at Fado Irish Pubs, an 11-unit chain headquartered in Atlanta, GA, notes that most of the company’s operators suspected the biggest issue would be “free pints,” or beer that was served, but not billed. In fact, the biggest issue was a 15-17% variance in the amount of ounces poured per draft beer. “Seventy-five percent of our issues were related to over pouring and draft-system related issues,” says Peterson. The company responded with a combined approach: specific glassware, creamer faucets, and the TapDynamics program. With these changes, Fado Pubs was able to reduce their variance to 4 or 5% and rolled the system out to six of its pubs.

Early in 2011, Quaker Steak and Lube (www.thelube.com), a restaurant with 35 locations in the U.S., implemented US Beverage Net’s (www.usbeveragenet.com) solution for monitoring and reporting on actual draft beer dispensed compared to what is billed on the POS system. US Beverage Net reports that its average annual program costs $1,500 per location, and the average client realizes $9,000 in recaptured product cost and revenues per location. Jim McGrath, Quaker Steak and Lube’s COO, says that since implementation his company “has reduced average draft beer waste from 15 percent down to 5 percent, which is a significant savings. This was done by monitoring each draft head on a daily basis to determine any over pouring. We used this tool to teach our bartenders how to pour more efficiently and properly.”

Including the bartenders in the process seems critical for success of any tap technology. Peterson adds, “You have to make the staff a part of the process. Ask, how can we work together to make this an opportunity? You need to empower and engage people to solve the problem rather than wag a finger.”

Improve Customer Service
Clearly, available bar and tap technologies can improve the bottom line, but what about customer service? Making sure customers get the specified amount of draft beer is a good thing, but so is reducing their wait time. Perhaps one of the biggest aggravations in a bar is getting the bartender’s attention when it’s time to settle the tab. What’s more, reducing the time the bartender needs to spend settling tabs can greatly improve customer service.

In the fall of 2011, Poquitos Mexican Food (www.vivapoquitos.com) in Seattle, WA launched the Tabbedout (www.tabbedout.com) mobile payment solution, which enables customers to open tabs, view them, and pay their bills from their smartphones. Rich Fox, managing partner at Poquitos, sees Tabbedout as a real point of convenience for customers, who can simply get up and leave when they are ready. Since Tabbedout passes the payment information to the POS up front, the merchant is protected from walked tabs, dead phones and other technical issues. The merchant is able to manually close the tab from within the POS at any time.

Fox was happy to see another layer of improved customer service that Tabbedout enabled: “Because the bartenders have an extra level of identification, it is allowing us to create a stronger relationship with regular customers who use the technology.” As for ROI, it takes fewer than five tabs opened per month with Tabbedout to generate 100% ROI for the merchant, according to Tabbedout.

Bottom Line
For bars looking to boost their technology quotient, the best advice is to have a firm understanding of the business before getting started. In the case of tap monitoring services, Peterson advises that higher volume businesses are best suited and the management has to be committed to monitoring the process daily. As for mobile payment options, they can greatly benefit a bar where “every second counts.”